Outsourcing has long been in the armory of forward-thinking companies. Initially, it was most often a short-term option to reduce cost, or perhaps to cope with a new product or a large order but, as time has passed, it has become a core part of commercial strategy for many businesses. Today, the trend is to look to an outsourced partner to deliver expertise and services in areas that are considered core to the success of the organization. With life science industries facing increased competition, global regulatory demands, and pressure to shorten time to market, outsourcing part – or all – of manufacturing is becoming increasingly prevalent. But what should be considered in choosing such a custom or contract manufacturing partner?
Building a better business with outsourcing
Manufacturing industries are studied and reported on by a large group of “industry watchers”. Each element of a business is scrutinized – trends are noted, and anticipated – and companies analyze the reports, looking for insights into improvement strategies. Outsourcing is one factor that is always explored, and, in fact, overall spending on outsourced services in the global market has grownin the last two decades, from US$45.6 billion in 2000 to US$86.6 billion in 2018. The pharma industry reflects this trend, with the percentage of spending on outsourced contracts (as opposed to in-house services) increasing from around 33% in 2014 to a predicted 51% in 2023.
Originally seen primarily as a cost reduction or capacity management strategy, recent thinking suggests that outsourcing has matured such that relationships are now more standardized, becoming process and people driven, rather than price driven.
Against this background, it is easy to predict that more high-end critical business functions will be outsourced in the next decade, while outsourcing of low-end services will likely stabilize.
Of course, the decision to outsource does allocate time-consuming tasks to a trusted third party, that would otherwise be undertaken by the in-house team. And, when manufacturing internally, the business may not always be equipped with the latest and most innovative tools, equipment and processes. As a result, the company’s efficiency and productivity can be hugely affected, resulting in increased costs.
Importantly, outsourcing enables businesses to gain access to external knowledge, skills and tools which may not be accessible within the company. It is the role of contract manufacturing companies to stay informed with the latest developments in the industry and employ the most effective equipment and tools. Partner companies can then exploit the benefits of implementing this advanced equipment and valuable expertise into their company workflow. Custom manufacturing allows flexibility too; a company can not only continue to produce its standard products, but also to add value and customize their designs to produce a unique product for a specific customer.
Outsourcing opponents argue that the flip side of outsourcing includes lack of quality control (QC), lack of grip on project management, and lower prospects of innovation. But as we have seen, outsourcing has only continued to grow and become a go-to strategy for many successful organizations across sectors. From start-ups to large enterprises, outsourcing continues to be a tool of choice to gain competitive advantage in the business scenario.
Adding value to companies in life science and diagnostic markets
Finding the right custom manufacturing partner in any business sector is a challenging process. There are many factors to consider, and various decisions to be made in order to match the company’s particular needs to the capabilities of any potential supply partner.
In many sectors, it is enough to identify a manufacturer who is equipped to meet the needs of a project, who can consistently deliver a product on time to the required specifications and who understands and applies QC in accordance with recognized standards.
However, for life science businesses looking for a partner to manufacture, for example, a reagent that will become a component of a diagnostic test, or to customize one of their own products into a different pack size or format, another level of scrutiny is needed.
Top tips for things to consider when evaluating a custom manufacturer in life science include:
1. Evaluate the manufacturing partner’s:
- Depth of scientific expertise
- Consultation and ongoing technical support
- Ability to meet quality standards and comply with regulatory requirements
- Manufacturing capabilities that meet current and future production needs
- Logistical support and delivery capabilities.
2. Set and agree clearly stated goals so that both parties stay the course and expectations are met. Clear and detailed scoping of the project, including establishing critical success factors for the manufacturing partnership can help to avoid unrealistic expectations on both sides.
3. Evaluate whether the partner offers flexibility to allow for ongoing process adjustments. In the custom field, things change or evolve more commonly than not, and manufacturers need to be flexible and able to respond. Decide early on if you want the contract manufacturer to own the process or have the flexibility of a portable proprietary process.
4. Ensure you will have access to and communication with people at all levels of the organization. Ask if you will be allocated a lead scientist and dedicated team, as well as access to relevant subject matter experts and ongoing technical support to maximize the success of the project.
5. Establish a spirit of partnership – for long-term partnering. While it is critical that you fully assess the partner’s expertise and ability to meet your needs, consider how well you feel the organization fits with yours culturally and in approach. Long-term relationships can be built with cooperation and commitment from both sides.
6. It can be worth considering different early-stage and later stage manufacturers. In this case, technology transfer agreements need to be in place up-front, and the phase 1 (early scoping and development, materials selection and small-batch manufacture) process must be compatible with development into phase 3 (full scale production for commercial supply).
7. Request details of the manufacturer’s quality management system (QMS). A well implemented QMS helps to coordinate a manufacturer’s activities to effectively and efficiently meet customer and regulatory requirements continuously. A manufacturing partner who has implemented a QMS will generally already have the following procedures in place:
1. Detailed manufacture and QC protocols
2. Production and process controls
3. Product certificate of analysis
4. Traceable product batch records
5. Product stability programs
6. Product change control and notification processes
7. Supplier evaluation and qualification program
8. Equipment maintenance and calibration program
9. Non-conforming product processes and procedures
10. Qualified and trained manufacture personnel
Depending on your product’s intended use, these manufacturing controls may be enough to ensure consistent manufacture of your product over time. In some cases, the intended use of your product may require additional manufacturing controls. Some additional controls that may be required could be:
‒ Analytical (QC) method validation
‒ Process validation
‒ Intended use (assay-specific) QC testing
‒ Product design according to design controls
When you are evaluating potential manufacturing partners who have implemented a robust QMS, your potential partner should be able to:
‒ Summarize their QMS that minimally includes reference to the list of attributes (1-10) above.
‒ Provide certification performed by an independent third party to an international standard, such as ISO9001, ISO13485, and ISO18385.
‒ Facilitate an on-site audit of their QMS, as applicable.
An ideal manufacturing partner is willing to spend time consulting with you to ensure appropriate QCs are in place to meet your intended use and regulatory requirements.
Gaining an understanding of the capabilities of any potential supplier in these areas is essential to making an informed decision. The market may change, expectations and technologies will change, so adaptability is crucial.
While cost optimization is still an important criterion for outsourcing, it is no longer at the top of the list, since disruptive outsourcing, when executed well, can deliver competitive advantage by transforming the way organizations operate, and making them more agile, efficient, and effective.